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Ratepayers on hook for NSP share of project  

Credit:  By ROGER TAYLOR | Business Columnist | The Chronicle Herald | April 26, 2013 | thechronicleherald.ca ~~

Nova Scotia is in desperate need to overhaul the way provincial energy decisions are made.

On Friday, the Nova Scotia Utility and Review Board approved Nova Scotia Power Inc.’s plan to spend $93 million on its share of the South Canoe wind farm in Lunenburg County, a move that will have the backing of ratepayers.

The review board approved the application based in part on Nova Scotia Power executives stating that the utility’s participation in South Canoe would make that project eight to 12 per cent less expensive than competiting projects.

But Luciano Lisi, CEO of Cape Breton Explorations Ltd., challenged the Nova Scotia Power application before the board. He told me Friday that he could have just as easily suggested NSP’s participation would make the project 20 per cent more expensive than other projects.

There is no evidence to support either claim, he says. The only way to determine whether it’s a good deal for Nova Scotia ratepayers is to compare the projects equally – apples to apples.

The review board, in its decision Friday, declined to release evidence in the case that could potentially be used to make an equal comparison of the projects.

“The board acknowledges the importance of an open and transparent process,” the review board stated.

“However, it also recognizes that the ratepayers have an interest in ensuring that NSPI can obtain favourable commercial terms in its contracts so that lower rates can be assured. Therefore, the board affirms its earlier ruling on confidentiality and does not allow (Cape Breton Explorations’) post-hearing request to make all of the documents filed in this application publicly available.”

The review board had already ruled during hearings in February that it did not have authority to overturn a decision by the province’s independent renewable energy administrator, allowing NSP to participate in the provincial government’s request for proposals for renewable energy projects.

The original request for proposals from the provincial government stipulated that bidders include the cost of construction in the power purchase agreement. However, after Friday’s decision, Nova Scotia Power is allowed to pass its share of the capital costs to ratepayers – an option not available to competing projects.

Although there were 19 projects submitted, Nova Scotia’s renewable electricity administrator, Massachusetts-based consultant John Dalton, chose three to be awarded 20-year contracts to supply electricity to the power grid. All three projects had Nova Scotia Power as a partner.

The projects include the $196-million South Canoe, which comprises two wind farms in Lunenburg County – a 78-megawatt project that Nova Scotia Power is building in partnership with Oxford Frozen Foods and a 24-megawatt wind farm on a neighbouring property NSP is building in association with Minas Basin Pulp and Power.

The third winning proposal is the Sable Wind development, which NSP is building with the Municipality of the District of Guysborough.

If Nova Scotia Power is to continue to dominate the power market in Nova Scotia, why bother calling for renewable energy proposals? The provincial government could simply ask NSP to build all the projects and ratepayers would have to believe they’re getting the lowest-cost energy possible.

But Nova Scotians haven’t been getting low-cost power; in fact, this province has some of the highest rates in the country.

Lisi says Nova Scotians will never know whether they’re getting the best deal possible on electricity rates as long as Nova Scotia Power is both distributing and generating electricity.

He says Nova Scotia needs to adopt a competitive industrial strategy, and NSP should be forced to divest all of its generating assets, which would then free it up to acquire power at the lowest price from any source, including even its parent, Emera Inc.

Source:  By ROGER TAYLOR | Business Columnist | The Chronicle Herald | April 26, 2013 | thechronicleherald.ca

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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